Tag Archive | "Ford Motor Co."

Feds Close Two Ford Safety Investigations

WASHINGTON — Federal regulators closed two investigations into safety issues in Ford Motor Co. vehicles —deciding that a recall of 1.1 million F-150s and other trucks was sufficient to address concerns, the government said Thursday.

The National Highway Traffic Safety Administration said it was closing its investigation into more than 1 million F-150 trucks after it was satisfied with Ford’s recall, reported The Detroit News.

In August, Ford said it was calling back 1997-2004 F-150s in “salt-belt” states after reviewing 700 complaints of corrosion of steel straps holding up fuel tanks.

Most of reports involved one or both straps failing — and about half involved the tank dropping and or dragging on the ground. There were 180 reports of leaking fuel.

Ford said 97 percent of complaints came from states that use large amounts of road salt.

Ford received two reports of a vehicle fire destroying a vehicle and a third in which a fire destroyed the vehicle and injured a driver.

“Ford’s recall action appears to adequately address the problem at this time,” NHTSA said in a report closing its investigation.

The recall covers some 1997-1999 F-250 and 2002-2003 Lincoln Blackwood trucks. The recall covers vehicles sold or registered in 21 salt-belt states, including Michigan, Ohio, New York, Pennsylvania and Indiana, and the District of Columbia.

Separately, NHTSA said it is also closing an investigation into 387,354 2010-2011 Ford Escape and Mercury Mariner SUVs into complaints that the liftgate glass shattered without warning.

NHTSA said it reviewed nearly 300 complaints into the issue, including 15 minor injuries.

Ford acknowledged a higher than normal level of glass breakage incidents in the 2010 model year and early 2011 vehicles.

Ford investigated the incidents “but failed to identify an anomaly in the glass manufacturing process” to explain the spike in reports, NHTSA said.

In November, Ford issued a Technical Service Bulletin to include broken liftgate glass on all 2010 Escape and Mariners — as well as some 2011 models.

In September 2004, Ford recalled about 955,000 Ford Explorer and Mercury Mountaineer SUVs from the 2002 and 2003 model years to replace the liftgate glass strut brackets and hinges.

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Ford Motor Deserves More Respect From Investors, Bank of America Says

Ford Motor Co., which fell below $10 yesterday for the first time in 13 months, is not receiving the credit it deserves from investors, Bank of America Corp. said.

Ford shares, which dropped 41 percent this year through yesterday, are trading at 2.6 times earnings before interest, taxes, depreciation and amortization, compared with a historical average of 4 to 5 times earnings, Bank of America analyst John Murphy wrote in a note today. Murphy added Ford to the company’s US 1 list of stocks with a buy recommendation, according to Bloomberg.

“Even in the downside scenario of a double-dip recession, Ford’s stalwart balance sheet is substantially healthier than in 2008,” Murphy wrote. “But we believe that the market is not giving Ford’s stock credit for the company’s balance-sheet health.”

Ford had net income of $4.95 billion in the first half of the year, as fuel-efficient models like the Fiesta subcompact attracted buyers in a slowing U.S. auto market. Ford paid down debt by $2.6 billion in the second quarter, leaving it with $22 billion in automotive gross cash and $14 billion in debt.

“The recovery in U.S. demand should drive the auto stocks higher while Ford’s product cycle hits a sweet spot driving market-share gains, with a ‘fortress-like’ balance sheet,” wrote Murphy, who has a price objective on Ford stock of $26. “It should also be noted that second-quarter results were solid.”

Ford, based in Dearborn, Michigan, rose 98 cents, or 9.9 percent, to $10.91 at 4:01 p.m. in New York Stock Exchange composite trading. The shares closed yesterday at $9.93, the lowest since June 29, 2010.

The Dow Jones Industrial Average rose 429.92 points, or 4 percent, to 11,239.77. Yesterday, the Dow fell 634.76 points, or 5.6 percent, after Standard & Poor’s downgraded the U.S.’s credit rating Aug. 5 to AA+ from AAA.

“The near-term economic challenges are clear, and we see the U.S. debt ceiling law and European Central Bank bond purchase as constructive developments to stabilize the global economy,” John Stoll, a Ford spokesman, said in a statement. “We remain focused on the incoming indicators and economic fundamentals, and we are monitoring how they will affect consumer confidence.”

Ford maintained its 2011 forecast of 13 million to 13.5 million industrywide sales of vehicles, including medium- and heavy-duty trucks. “It likely will come in at the lower end,” Stoll said.

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Alan Mulally, Ford C.E.O., Brings the Focus Electric to “Late Show”

Alan Mulally, the Ford Motor Company president and chief executive, took his pitch for the electric car to late-night television just after midnight on Thursday, with an appearance on “The Late Show With David Letterman” on CBS.

Introduced by his uncharacteristically effusive host as a “hero” and the man “responsible for rescuing the Ford Motor Company from the brink of bankruptcy,” Mr. Mulally took his seat with a smile and a wave to the audience and, beyond it, the country Mr. Mulally hoped to sell on the Focus Electric, a purely electric compact car due in showrooms in 2012, according to The New York Times.

The conversation began in autobiographical cruise control, as the men swapped remembrances of early jobs bagging groceries and delivering newspapers. Mr. Mulally, at Mr. Letterman’s urging, then talked about his 37 years of experience in the aviation industry, specifically at Boeing.

“Nearly 6 billion people have traveled on the 737,” said Mr. Letterman, to the applause of the audience. After a few minutes, the perfunctory give-and-take was steered not so deftly by Mr. Letterman into the car world.

Mr. Mulally described the opportunity extended by William Clay Ford Jr., the automaker’s chairman, to lead Ford as his chance “to serve a second American global icon.” Mr. Letterman then pointed out that Ford weathered the global financial crisis without “government bailout money.” Cue a clapping audience and a beaming auto executive.

“When I joined Ford five years ago, Dave, clearly we needed to move very quickly to a different strategy,” said Mr. Mulally. “We decided together to get focused on the Ford brand and divested all the other ones.” During Mr. Mulally’s tenure, Ford sold its Jaguar-Land Rover and Volvo divisions, closed its Mercury brand and significantly divested itself of its holdings in Mazda.

Mr. Mulally sidestepped a question as to why other domestic automakers could not follow Ford’s example, before leading Mr. Letterman on a tour of the Focus Electric hatchback, which has a driving range of 80 miles, Mr. Mulally said.

Sliding behind the wheel, Mr. Letterman drove the car from one side of the stage to the other.

Mr. Mulally’s sales pitch was on target, but the shared moments of schtick were flat and felt scripted. The appearance felt like a car commercial, which is probably what it was meant to be.

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Ford Misses U.S. Sales Estimates as Spending Drops; Toyota, Honda Fall

Ford Motor Co. said U.S. sales rose less in July than analysts’ estimated, while Toyota Motor Corp. and Honda Motor Co. posted declines amid less consumer spending.

Ford light-vehicle sales rose 5.9 percent to 180,315 vehicles, the Dearborn, Michigan-based automaker said today in a statement. The results trailed six analysts’ average estimate for a 7.6 percent gain. Toyota sales fell 23 percent to 130,802, and Honda deliveries plunged 28 percent to 80,502, reported Bloomberg.

A slump in hiring is hurting confidence and leading consumers to retrench as vehicle inventories recover from the March 11 tsunami in Japan that disrupted production and led to vehicle shortages. July light-vehicle deliveries ran at a seasonally adjusted annual rate of 12.2 million, trailing the 12.5 million pace through the first half, Autodata Corp. said.

“The industry constraints are dissipating, but the economic constraints are stronger than what we thought,” Paul Ballew, chief economist for Nationwide Mutual Insurance Co., said in a phone interview. “Even with inventories marginally better, the selling rate looks comparable to June. For the remainder of the year, we’re focused on what the heck is happening from an underlying growth standpoint in the economy.”

The U.S. light-vehicle sales rate exceeded the 11.8 million pace that was the average estimate of 12 analysts surveyed by Bloomberg.

General Motors Co. deliveries climbed 7.6 percent to 214,915, the Detroit-based automaker said today in a statement. The results beat the 7 percent increase that was the average estimate of six analysts surveyed by Bloomberg.

Congressional debate over raising the $14.3 trillion U.S. debt ceiling combined with gasoline prices above $3.50 a gallon and limited supply of small vehicles in hindering total industry sales, Don Johnson, GM’s vice president of U.S. sales, said on a conference call.

“The economy has clearly lost some momentum,” Johnson said today. “We do believe that it will continue to recover, but more gradually than we originally anticipated as we move through the second half of the year.”

Consumer spending in the U.S. unexpectedly dropped in June for the first time in almost two years, Commerce Department figures showed today in Washington. Incomes grew at the slowest pace since November and the savings rate climbed to the highest since September.

GM and Ford have said that 2011 U.S. vehicle sales may be at the low end of their forecast of 13 million to 13.5 million vehicles, including medium- and heavy-duty trucks.

IHS Automotive will lower its estimate for full-year U.S. light-vehicle deliveries from 12.7 million, Rebecca Lindland, an analyst based in Lexington, Massachusetts, said today in a Bloomberg Television interview.

“We’re seeing consumers not have the confidence to spend,” Lindland said. IHS will lower its estimate as soon as tomorrow, she said in a telephone interview.

Employers added 18,000 jobs in June, the smallest gain in nine months, as the U.S. unemployment rate rose to 9.2 percent, the Labor Department said. The Thomson Reuters/University of Michigan index of consumer sentiment fell in July to 63.7, the weakest since March 2009.

Chrysler Group LLC, the automaker majority owned by Fiat SpA, said deliveries increased 20 percent to 112,026, beating the 15 percent gain that was the average of four analysts’ estimates. Sales of Chrysler’s Jeep Grand Cherokee and Wrangler sport-utility vehicles surged 76 percent and 43 percent, respectively, the Auburn Hills, Michigan-based company said.

Toyota sales of its Toyota, Lexus and Scion models were better than an expected decline of 25 percent, the average estimate of three analysts surveyed by Bloomberg. Honda, the Japanese automaker that relies most on sales to U.S. customers, had a bigger decline than the 23 percent drop that was the average of three analysts’ estimates.

Hyundai Motor Co., South Korea’s largest automaker, delivered 59,561 vehicles to U.S. customers in July, up 10 percent from a year ago, the company said in a statement. Kia Motors Corp., Hyundai’s affiliate, sold 45,504 vehicles.

Combined volume for Hyundai and Kia, which are partner companies that maintain separate operations in the U.S., totaled 105,065, trailing only GM, Ford, Toyota and Chrysler.

Nissan Motor Co., Japan’s second-biggest automaker, said U.S. sales rose 2.7 percent to 84,601 cars and light trucks. Deliveries for the Yokohama-based company were expected to be little changed from a year earlier, according to the average of three analysts’ estimates.

Industry sales will rebound in the second half as availability of vehicles increases, said Alan Baum, a West Bloomfield, Michigan-based industry consultant at Baum & Associates. The improved supply, still recovering from the March earthquake and tsunami in Japan, will likely lead to lower vehicle pricing late in the year, he said.

“The issue is going to be how aggressive Toyota and Honda in particular are in terms of pricing and trying to get their sales back in order,” Baum said today in a Bloomberg Television interview.

Industrywide vehicle inventory climbed to 54 days’ supply at the beginning of July, from 49 days in June, J.D. Power & Associates said in a July 21 statement. Car inventory started the month at a 43-day supply, with models such as Toyota’s Prius and Honda’s Civic below 25 days, the Westlake Village, California-based researcher said.

Deliveries of GM’s Chevrolet Cruze compact slipped 1 percent to 24,648 from June, when it was the industry’s best- selling car. Cruze in July finished behind the Toyota Camry sedan at 27,016. GM ended the month with about 28,000 Cruzes in inventory, or about 30 days supply, Johnson said yesterday.

Sales of Ford’s Focus compact fell 3.4 percent to 14,889. Inventory of the model is one-fourth of year-earlier levels, said George Pipas, the automaker’s sales analyst.

“Some of our dealers are literally selling them right off the truck,” Ken Czubay, Ford vice president of U.S. sales, said on a conference call.

Ford’s 5.9 percent increase in sales reflects year-ago deliveries of Volvo models. Ford has since sold the brand.

Jay Dunphy, president of Dunphy Motors, a Ford dealer in Philadelphia, said last week his store had three Focus cars and three Fiesta subcompacts in stock.

“We would love to be able to have about 15 of them each,” Dunphy said in a telephone interview. “Ford has an accepted product that is being bought by the public. The biggest problem is availability.”

Sales of Ford’s F-Series and GM’s Chevrolet Silverado pickups, the two top-selling models in the industry, declined in July. Silverado deliveries dropped 4.5 percent to 33,121, while F-Series slipped 2.7 percent to 49,104.

Inventory of Silverado and GMC Sierra full-size trucks fell to 115 days supply from 122 days at the end of June, Johnson said today. The automaker is targeting 200,000 pickups, or 90 days supply, by the end of the year, he said.

GM may have to cut prices or production on trucks if demand falls further, said Itay Michaeli, a Citigroup Inc. analyst based in New York.

For now, “they seem to have dealer buy-in,” Michaeli said in a phone interview. “If that changes, they will have to cut production.”

GM fell $1.02, or 3.6 percent, to $27.05 at 4 p.m. in New York Stock Exchange composite trading. Ford declined 50 cents, or 4.1 percent, to $11.85.

July had 26 selling days, one fewer than a year earlier.

The U.S. averaged annual light-vehicle sales of 16.8 million vehicles from 2000 to 2007, according to researcher Autodata Corp. Deliveries climbed to 11.6 million in 2010 from a 27-year low of 10.4 million in 2009.

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Ford Recalls F-150 Trucks for Fire-Causing Strap Corrosion

Ford Motor Co. is recalling more than 1 million trucks, including the F-150, the top-selling U.S. vehicle, because straps that secure fuel tanks to the vehicles may corrode and cause the tanks to fall.

The defect has led to three fires and one injury, Wesley Sherwood, a Ford spokesman, said in an e-mail. The National Highway Traffic Safety Administration announced the recall today on its website, reported Bloomberg.

The recalls follow an investigation opened last year by the U.S. auto-safety regulator. They are made in 21 U.S. states, and the District of Columbia, where de-icing chemicals used on roads in cold weather may cause corrosion of the metal straps.

“Ford has been polishing their image and getting it very, very good, so this doesn’t help,” said Jim Hall, principal of 2953 Analytics Inc., a consulting firm in Birmingham, Michigan. “They’ve got to get ahold of the affected customers fast; get it handled and put to bed. Don’t let it linger.”

The trucks being recalled are “older, higher-mileage” vehicles and have fuel-tank straps that “can corrode after operation for extended periods of time in high-corrosion areas,” Sherwood said.

Ford, based in Dearborn, Michigan, said the recall covers 1.1 million pickup trucks, including F-150s from model years 1997 to 2004; F-250s from model years 1997 to 1999; and Lincoln Blackwoods from model years 2002 to 2003.

The company said it will notify owners of affected vehicles in mid-September and make repairs at no cost. If replacement straps aren’t available when the recall repairs are done, the company said it may install a cable support under the fuel-tank strap as an interim repair.

Ford earlier this year recalled more than 1 million F-150s for air-bag defects after a push by U.S. regulators. Air bags in trucks from model years 2004 to 2006 may not deploy when needed. None of the trucks were included in both recalls, Sherwood said.

Ford rose 14 cents, or 1.2 percent, to $12.35 at 4:02 p.m. U.S. East Coast time in New York Stock Exchange composite trading. The shares have lost 26 percent this year.

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Ford Second-Quarter Profit Beats Estimates

Ford Motor Co., poised to begin negotiations with the United Auto Workers, said second-quarter profit fell less than estimates as buyers paid more for models such as the Fiesta subcompact.

Net income fell to $2.4 billion from $2.6 billion a year earlier, Dearborn, Michigan-based Ford said today in a statement. Excluding some items, profit was 65 cents a share, beating the 61-cent average of 14 analysts’ estimates compiled by Bloomberg. Sales climbed 1.4 percent to $35.5 billion even after last year’s sale of Volvo Cars.

Ford is set to begin contract talks this week with the UAW to close a gap in labor costs with rivals. Chief Executive Officer Alan Mulally raised prices for Fiesta and Explorer sport-utility vehicles to offset some of the $4 billion in higher costs that Ford expects this year, including manufacturing spending.

“This wasn’t the easiest of quarters,” Lewis Booth, Ford’s Chief Financial Officer, told reporters today in Dearborn. In North America and Europe, “demand was a little bit weaker in both markets versus the first quarter” because of Europe’s debt crisis and supply constraints in North America.

Shares rose 25 cents, or 1.9 percent, to $13.42 before the start of regular trading.

Pretax profit in Ford’s European operations plunged 45 percent to $176 million. While the results compared unfavorably to a year earlier when the company was rebuilding inventories after government programs to scrap older vehicles, the figures were “well in-line with our planning,” Booth said.

Industrywide U.S. light-vehicle sales slowed to a seasonally adjusted annual rate of 12.1 million in the second quarter from 13.1 million in the prior three months, according to Autodata Corp. The March 11 earthquake and tsunami in Japan reduced supply of vehicles and parts.

Ford’s U.S. deliveries rose 9 percent to 1.07 million in the first half, trailing the industry’s 13 percent gain. The 9 percent figure includes year-ago sales of Volvo vehicles.

“We’re looking at it being a rough ride for the rest of this year not just for Ford, but for the industry as a whole,” Stephen Spivey, an analyst at Frost & Sullivan Inc. in San Antonio, said in a phone interview before results were released.

Ford raised prices three times and lowered discounts more than the industry average in their home market during the first half, according to Woodcliff Lake, New Jersey-based Autodata. Higher prices boosted global revenue by $1.1 billion, the company said.

Mulally, 65, is betting U.S. consumers will switch from larger vehicles to more fuel-efficient cars such as the Fiesta and pay more for amenities such as heated leather seats as gasoline prices rise. Regular unleaded gas has exceeded $3.50 a gallon in the U.S. since March, according to AAA.

The cost of developing new models and improving the Ford and Lincoln brand images will add $2 billion to the company’s structural costs this year. Ford also reiterated its forecast for commodity costs to rise by another $2 billion.

“There are various kinds of initial hits to the bottom line as you’re bringing out new product, but if it’s done right you make that up on the back end,” Stephen Brown, a Chicago- based analyst at Fitch Ratings, said in a phone interview before results were released.

In 2008, Ford’s sales plunged when gas prices peaked at $4.11 a gallon and damped demand for the automaker’s pickups and SUVs. Ford had $30.1 billion in losses from 2006 through 2008, before earning $9.28 billion in the last two years.

Ford shares have declined 22 percent this year through yesterday after a 68 percent gain in 2010.

Ford’s second-quarter sales of $35.5 billion topped nine analysts’ average estimate for $32.1 billion.

The automaker boosted North American production for the quarter by 8.7 percent percent to 710,000 cars and trucks, in line with its forecast on April 26. Pretax profit for the region rose less that 1 percent percent to $1.91 billion.

Ford forecast a 7.5 percent increase to third-quarter production to 630,000 units in North America, according to today’s statement. Worldwide output will rise 7.3 percent to 1.35 million.

Ford maintained its for full-year industrywide U.S. sales of 13 million to 13.5 million vehicles, including medium-and heavy-duty trucks.
“We probably feel closer to the bottom end of that, but we’re still expecting to see some recovery in the second half as availability of product from all manufacturers becomes better,” Booth said.

Profit in Ford’s credit operations will fall by about $1.1 billion this year because of changes in lease depreciation and credit-loss reserves, repeating a previous forecast, the company said. Ford reiterated its forecast that the unit will distribute about $3 billion to the parent company this year.

Ford Credit distributed $1 billion to the parent company in the second quarter, bringing first-half contributions to $1.9 billion.

Ford’s automotive operations had $22 billion in cash on June 30, up from $21.3 billion on March 31. The company, which reduced debt by $14.5 billion last year, cut automotive debt to $14 billion on June 30, from $16.6 billion on March 31.

Ford has more debt than rivals because it borrowed more than $23 billion in late 2006 before credit markets froze, allowing it to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC in 2009.

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